Correlation Between Xtrackers California and Tidal Trust
Can any of the company-specific risk be diversified away by investing in both Xtrackers California and Tidal Trust at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Xtrackers California and Tidal Trust into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Xtrackers California Municipal and Tidal Trust III, you can compare the effects of market volatilities on Xtrackers California and Tidal Trust and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Xtrackers California with a short position of Tidal Trust. Check out your portfolio center. Please also check ongoing floating volatility patterns of Xtrackers California and Tidal Trust.
Diversification Opportunities for Xtrackers California and Tidal Trust
0.9 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Xtrackers and Tidal is 0.9. Overlapping area represents the amount of risk that can be diversified away by holding Xtrackers California Municipal and Tidal Trust III in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on Tidal Trust III and Xtrackers California is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Xtrackers California Municipal are associated (or correlated) with Tidal Trust. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of Tidal Trust III has no effect on the direction of Xtrackers California i.e., Xtrackers California and Tidal Trust go up and down completely randomly.
Pair Corralation between Xtrackers California and Tidal Trust
Allowing for the 90-day total investment horizon Xtrackers California Municipal is expected to generate 0.56 times more return on investment than Tidal Trust. However, Xtrackers California Municipal is 1.8 times less risky than Tidal Trust. It trades about 0.25 of its potential returns per unit of risk. Tidal Trust III is currently generating about 0.13 per unit of risk. If you would invest 2,507 in Xtrackers California Municipal on September 4, 2024 and sell it today you would earn a total of 40.00 from holding Xtrackers California Municipal or generate 1.6% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Xtrackers California Municipal vs. Tidal Trust III
Performance |
| Timeline |
| Xtrackers California |
| Tidal Trust III |
Xtrackers California and Tidal Trust Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Xtrackers California and Tidal Trust
The main advantage of trading using opposite Xtrackers California and Tidal Trust positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Xtrackers California position performs unexpectedly, Tidal Trust can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in Tidal Trust will offset losses from the drop in Tidal Trust's long position.| Xtrackers California vs. BlackRock High Yield | Xtrackers California vs. Dimensional ETF Trust | Xtrackers California vs. JP Morgan Exchange Traded | Xtrackers California vs. Janus Detroit Street |
| Tidal Trust vs. BlackRock High Yield | Tidal Trust vs. Dimensional ETF Trust | Tidal Trust vs. JP Morgan Exchange Traded | Tidal Trust vs. Janus Detroit Street |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the AI Portfolio Architect module to use AI to generate optimal portfolios and find profitable investment opportunities.
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